Chinta Puxley, The Canadian Press
Published Wednesday, July 2, 2014 10:00AM CST
Last Updated Wednesday, July 2, 2014 5:27PM CST

WINNIPEG -- Manitoba is giving the green light to the construction of a $6 billion northern hydro dam but putting the brakes on a second $10-billion dam until it is sure energy exports will justify the price tag.

The NDP announced it is granting the Keeyask generating station an environmental licence despite opposition from Manitoba's Metis. But it put plans for construction of the Conawapa dam on hold on the advice of the Public Utilities Board until "more export sales are confirmed."

In a report released Wednesday, the board said Crown-owned Manitoba Hydro had not made a strong enough business case for building the Conawapa dam.

"The risks associated with the Conawapa project are unacceptable," the provincial regulator's report states. "It is too speculative in light of rapidly changing conditions in North American electricity markets."

Premier Greg Selinger had argued that two export agreements to send 416 megawatts to Wisconsin justified the need to spend billions building the two generating stations on rivers in the north.

The Public Utilities Board warned in 2011 that low prices could force Manitoba consumers to subsidize exports and see domestic prices jump by 140 per cent over the next 20 years.

Manitoba's Opposition Progressive Conservatives have questioned the need for new dams, pointing to the difficulty hydro exports have competing against low natural gas prices in the U.S. market.

Stan Struthers, minister responsible for Manitoba Hydro, said the province accepts the board's recommendation even though one of the contracts to sell power to Wisconsin depends on the construction of Conawapa.

"More time is available and required to finalized additional power sale arrangements to strengthen the business case," Struthers said.

"We have asked that (Manitoba) Hydro look into this on a very urgent basis. We believe we can develop that business case that will allow us to move forward and do so in a surefooted way."

Building the Conawapa generating station is still "vitally important to Manitoba's energy future," he added.

Conservation Minister Gord Mackintosh said the environmental licence granted to the Keeyask project means construction can start this summer. It is expected to be complete by 2019.

The licence is the strictest of its kind with 165 conditions attached, he said. The conditions include protecting lake sturgeon, caribou, wetlands and establishing mercury monitoring programs.

"Sturgeon will be impacted by this proposal but the conditions require that (Manitoba) Hydro more than make up for that impact. It must be mitigated," Mackintosh said.

Manitoba Hydro will develop "passable" turbines for fish, as well as stock sturgeon in the region for at least 50 years, he said.

The Manitoba Metis Federation has accused the government of running rough-shod over its rights in its haste to build the project.

David Chartrand, president of the Metis federation, has promised to fight the generating station -- and the transmission line that goes along with it -- as both inch closer to construction.

He has said the province hasn't properly consulted the Metis or considered how the hydro projects would hurt commercial Metis fishers and destroy trapping lines. Chartrand couldn't immediately be reached for comment Wednesday.

Mackintosh said no other project has been more carefully reviewed.

Consultations conducted by the Clean Environment Commission heard from 219 people. Consultations with aboriginal people resulted in 35 conditions being attached to the licence, he said. The Metis were consulted during that process as well and will continue to be going forward, he added.

Once the Keeyask station is finished, Mackintosh said the last coal-fired plant in Manitoba, located in Brandon, is to be shut down.

"The Keeyask dam would emit in 100 years what a gas-fired electricity plant would emit in 177 days," Mackintosh said.

"Clearly the hydro dam ... is a fantastic alternative in the interests of battling climate change, of ensuring that Manitobans have clean air."

On the commission's recommendation, the province has already granted an environmental licence to the plan to build a 1,300-km transmission line up the west side of Lake Manitoba, which would carry the electricity from the northern dams down to the U.S.

Tory critic Shannon Martin said the NDP is being guided by politics rather than common sense. Building big generating stations might get a "big splash", but Martin said it's Manitoba ratepayers that will end up footing the bill.

"We're talking about billions of dollars being spent on projects of questionable, long-term value," he said. "I think every ratepayer has to be seriously concerned about where (Manitoba) Hydro is going."